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Wal-Mart Backs Drive to Make
Companies Pay for Health Coverage

By

Janet Adamy and

Ann Zimmerman

Updated July 1, 2009 11:59 p.m. ET

WASHINGTON -- In a major break with most other large companies,
Wal-Mart Stores Inc.
Tuesday told the White House that it supports requiring employers to provide health insurance to workers, a centerpiece of President Barack Obama's effort to provide near-universal coverage to Americans.

The support of Wal-Mart, the nation's largest private employer, could give momentum to one of the most-contentious aspects of legislation taking shape in Congress to fix the health system. To help pay for covering the 46 million uninsured, lawmakers have proposed mandating that all but small employers provide insurance for workers or help pay for it.

Lobbies for large corporations have opposed the idea. The U.S. Chamber of Commerce has fought such a mandate, saying it would prompt companies to cut jobs, lower wages and possibly drive them out of business. Wal-Mart -- which provides insurance to employees and wants to level the playing field with companies that don't -- on Tuesday delivered a letter to President Obama taking a different stance.

"We are for an employer mandate which is fair and broad in its coverage," said the letter, signed by Wal-Mart Chief Executive Mike Duke. Andrew Stern, president of the Service Employees International Union, also signed the letter, along with John Podesta, who led President Obama's transition team and is chief executive of the Center for American Progress, a liberal-leaning think tank.

The National Retail Federation, the industry's main lobby, said it was "flabbergasted" by Wal-Mart's move. "We have been one of the foremost opponents to employer mandate," said Neil Trautwein, vice president with the Washington-based trade group. "We are surprised and disappointed by Wal-Mart's choice to embrace an employer mandate in exchange for a promise of cost savings."

Mr. Trautwein said an employer mandate is "the single most destructive thing you could do to the health-care system shy of a single-payer system," under which the government handles health-care administration. The mandate "would quite possibly cut off the economic recovery we all desperately need," he said. The group believes forcing companies to provide insurance will raise costs for its members.

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Under the plans being discussed in Congress, small businesses would either be exempt from the mandate or face a less-onerous requirement.

The U.S. Chamber of Commerce said most of its members oppose an employer mandate, and it doesn't think Wal-Mart's stance will change that. "The kind that the groups in this letter support is the worst incarnation, the most dangerous policy," said James Gelfand, senior manager of health policy for the group, which represents three million businesses.

Wal-Mart's support of a broad-based employer mandate is a shift from its previous stance on health-care overhaul and follows years of tussles with organized labor, which has failed in drives to unionize Wal-Mart's store workers. Two years ago, Wal-Mart joined with the SEIU, the country's largest union, to call for affordable health care for all Americans by 2012. The group called for lowering health-care costs and insuring more Americans.

In recent years, Wal-Mart has improved its health-care benefits, cutting its waiting time for earning benefits in half for both full- and part-time employees and offering more plan choices. About 52% of Wal-Mart's 1.4 million U.S. employees are covered by company-provided insurance, up from 46.2% three years ago. The retail industry average is 45%, according to a Kaiser Family Foundation 2008 study.

Wal-Mart isn't changing its policies. The company says it supports the employer mandate because all businesses should share the burden of fixing the health-care system. Wal-Mart also said the mandate will only work if it is accompanied by a government commitment to rein in health-care costs that is guaranteed.

Wal-Mart's support for a broad mandate also appears to be aimed at beating back an alternative that may be less favorable to the company. The Senate Finance Committee is considering a measure expected to result in a more burdensome health-insurance requirement for companies that have lower-wage workers. The company's letter said: "any alternative to an employer mandate should not create barriers to hiring entry level employees."

As the White House and Congress began floating proposals, Wal-Mart felt it needed to shape the debate, said Leslie Dach, Wal-Mart's executive vice president of corporate affairs and government relations.

"As a company, we believe the present health-care system is unsustainable and making the country's businesses less competitive in the global economy," said Mr. Dach, who delivered the letter Tuesday to White House Chief of Staff Rahm Emanuel. Mr. Dach is a former adviser to Democratic politicians.

In a meeting with officials behind the letter, Mr. Emanuel said, "Cost control and employer mandate are heads and tails of the same coin."

Most Republicans have opposed an employer mandate. "Congress cannot take actions placing burdens on businesses of any size that exacerbate our nation's economic woes," Rep. Roy Blunt (R. Mo.) said in response to Wal-Mart's announcement.

Labor groups such as SEIU not long ago criticized Wal-Mart for what they said were skimpy health benefits the world's largest retailer provided employees.

Nancy-Ann DeParle, head of the White House Office of Health Reform, said it is significant that Wal-Mart and the SEIU had joined on this.